AT&T Hints End of "Exclusivity Agreements" in SEC Filing

For the first time in a quarterly SEC filing, AT&T has made direct mention of the impact that the loss of certain "exclusivity agreements" could have on the company. The move has pundits predicting that the oft-rumored contract disentanglement between Apple and AT&T is either at-hand, or coming up soon.

For the first time in a quarterly SEC filing, AT&T has made direct mention of the impact that the loss of certain "exclusivity agreements" could have on the company: In this case, none. Nevertheless, the move has pundits predicting that the oft-rumored contract disentanglement between Apple and AT&T is either at-hand, or coming up soon.

"As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice)," writes AT&T in the filing. "And we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier. "

The iPhone is AT&T's most popular smartphone to date and the company has been the exclusive U.S. carrier for the device since its launch in June 2007. Recent documents unveiled in a class-action lawsuit against AT&T have brought up the fact that, a month before the original iPhone's release, an article in USA Today spelled out that AT&T and Apple would be locked together in a five-year agreement for distribution rights.

Of course, contracts and agreements can change. Even so, AT&T remains confident that a mix of technological and account-related lock-ins will keep customers under the fold if and when said "exclusivity agreements" go away.

"More than 80 percent of our postpaid subscribers are on Family Talk Plans and business plans that would involve moving the whole group to a new carrier," writes AT&T.

"Moreover, the vast majority of our postpaid subscribers are allowed to accumulate unused minutes, a feature that is currently not offered by other major post-paid carriers in the United States, and users would lose these minutes if they switched carriers," the company adds.

AT&T also cites the incompatibility of its phones GSM-based cellular network technology with other U.S. providers (namely those using CDMA) as a reason why customers will ultimately stick with the carrier. As well, the company claims that its deviceseven if switched over to another carrier that uses GSM networkingwould lose enough key features as to discourage customers from jumping ship.

"Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations," writes AT&T.

That said, AT&T's recent actionsincluding increasing its early termination fees, extending iPhone 4 upgrade availabilities, and nixing unlimited network data planshave pundits suspecting that the company is battening down the hatches, as it were, for a potential iPhone jump to Verizon, T-Mobile, or both.

When that happens, it's not just AT&T's growth potential that's in the hot seatanalysts have suggested that the Android market could take a beating as well, for customers adverse to AT&T's network would finally able to acquire iPhones of their very own sans complaint.

David Murphy got his first real taste of technology journalism when he arrived at PC Magazine as an intern in 2005. A three-month gig turned to six months, six months turned to occasional freelance assignments, and he has since rejoined his tech-loving, mostly New York-based friends as one of PCMag.com's news contributors.
His rise to (self-described) fame in the world of tech journalism began during his stint as an associate editor at Maximum PC, where his love of cardboard-based PC construction and meetings put him in...
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